The laboratory testing company is exiting the challenging Canadian market and is focusing on U.S. operations.
California-based Steep Hill (CSE: STPH) announced on Friday that one of its affiliate companies in Canada will close, effective Sept. 1, due to increased costs and declining profits.
According to a news release, the Ontario testing lab—founded as Molecular Science Corp.—was acquired by Steep Hill just last year. Still, in the past six months, the Canadian cannabis market has taken a severe downturn.
“Changes in the market, including price compression and increased costs, have made ongoing operations unsustainable from a profitability standpoint,” Steep Hill CEO Sameet Kanade said in the announcement.
Despite investments in the lab and the addition of in-house micro testing, Steep Hill found that the market for testing services “has suffered from significant price discounting and lab-shopping for desired results.”
The testing company also implemented several “right-sizing” measures, including headcount reduction, to address the increasingly challenging market.
Steep Hill also cited “excess capacity and lack of profitability” for the licensed marijuana producers in Canada more broadly as a factor in its decision to exit the national market.
According to its website, the closure leaves Steep Hill with 11 operational labs in Arkansas, California, Illinois, Massachusetts, Michigan, Mississippi, New Jersey, Oklahoma, Pennsylvania, Vermont, and one lab in Mexico City. According to the release, the company will focus primarily on the U.S. market in the future.
Financial Details
Steep Hill recorded revenue of about C$1.16 million (US$920,000) for the second quarter ended June 30. Of that, C$662,895 (57%) came from Steep Hill U.S. operations.
The company reported a net loss before other income/expenses of C$1.04 million for the same period. Steep Hill noted in its regulatory filings that most of the loss was attributable to operations in Canada.
Disclaimer: https://www.greenmarketreport.com/steep-hill-to-close-canadian-marijuana-testing-lab/
Posted by: Times Of Hemp, TOH, #TOH, #TimesOfHemp, https://www.timesofhemp.com
